Remember your school time? You’re yearly rating A, B, C, D, or F use to indicate your performance in the school. Credit rating works in the similar fashion. A credit rating is also given letters A, B, or C, where A being the highest and C being the lowest. Each letter defines your credit background and helps in determining creditors, whether or not should the money be lent to you. When your credit rating is bad, you often find problems securing a loan for accomplishing few tasks. That is the reason there are credit cards or cash-in-advance loans.
There are loans available in the market today that does not require you to have excellent credit ratings. Even with the worst credit score, you can still have small loans that can help you through your urgencies. These loans are called short-term loans or payday loans.
Payday loans are only for people who live between their paychecks. To make it simpler, there are many Americans today who do not have even $100 savings in their bank accounts. With credit card bills and monthly utility bills, it sometimes gets tough to meet the both ends. Hence, there are payday loans that are short-term and are required to be paid on your following paycheck, which is generally up to 30days. The interest rate on these loans is quite higher than your regular loans. Once your application is approved, you can receive the money in 24hrs time. Therefore, it is important that you don’t default on your payment, else you would be charged with a late fee, and the interest will continue to grow.
Many Americans think that acquiring payday loans is a safe bet because they do not require your credit rating and is a convenient way to borrow money. What people don’t understand is that they would be paying a scorching high-interest rate on these loans. Also, with bad credit ratings, it gets all the more difficult to acquire other important loans like home loans or auto loans to accomplish your bigger needs.
If you are able to manage good ratings, then it is recommended to apply for credit cards rather than taking these short-term loans. When you research the difference, you would realize that the difference in interest rates are huge and a credit card is a much cheaper option.
There is no doubting the fact that payday loans are a convenient option for people with bad credit history, especially when getting these loans only require you to fill an online application form, and your loan would be approved. But be aware that you don’t get into this vicious circle of reapplying these loans every time you are in need of money. This will not only make you unmanageable in terms of finances, but also raise concerns for the lenders, and there are all possibilities of getting your loan rejected.
Therefore, depend on these loans only if you don’t have other alternatives to fall back on. Until the time, you are able to survive without these loans, avoid taking them.